Buying a home for the first time is an exciting experience. There are a lot of things you can look forward to. The excitement of starting a new life is definitely one of those. But first, you’d have go to through a gruelling search for the home that best suits you.
Don’t take the decision for granted. It will, after all, dictate a huge chunk of your life and that of your family. Not sure where to start? Don’t worry, this checklist is specially designed for first-time home buyers like you.
Things you need to prepare
There is a misconception that buying a home starts when you go to open houses and talk to brokers. But that is already half the journey. In reality, the investment takes months or even years before it achieves its fruition state.
These are the important things you need to take care of before actually shopping for your dream house:
- Credit rating
In buying a home, a considerable amount of money is needed. Unless you’re extremely wealthy or you just won the lottery, odds are you’ll need to borrow funds from a bank. In that case, you’ll need your credit rating to be good. Otherwise, your loan application might be turned down by the bank and you’ll have to postpone buying that dream house. So, the first thing you must do is to settle any outstanding credit.
It takes a long time before you can see significant changes in your credit score. That’s why it is best to start addressing your credit standing as soon as you can.
Take note that each financial institution varies in computing your credit score. Generally, a score of 625 to 699 is categorised as “good.” You’d want to get 625 or higher for a greater chance of being approved.
If you think your standing with the bank is sufficient, you must then determine your budget. Identifying your budget range will help you narrow down your options.
Keep in mind that paying for the house is a long-term responsibility. Gauge your budget. Set a range where you’re still comfortable. It will also allow you to be flexible and not be restrained by a fixed budget.
It is wise to identify your outgoings. The exercise will give you an idea of how much you’d be spending in your new home. Most importantly, you’ll know if you’re financially capable of sustaining your family there.
When doing the exercise, remember to include the house amortisation, utility bills, grocery, services, maintenance, and other expenses. You can also plan future investments to help reach your target finances.
Gather paperwork related to your finances such as past tax statements, proof of income, proof of savings, a record of existing debts and their status, and your credit score. When you’re organised with these things early on, applying and getting a loan will be hassle-free.
- Mortgage lender
There are numerous varieties of loan structures and features. A responsible home buyer must carefully shop for a lender to ensure they are making an informed decision. You can take advantage of valuable resources online for comparing rate loans and loan types. Consider also the options available for the length of payment.
Shopping for a mortgage lender will also enable you to identify the structures that work best with your financial status. It will even give you greater financial control.
- Pre-approved home loan
Pre-approval is normally not mandatory. It is up to you if you opt for it or not, but it can give you an increased negotiating power with the seller. Not to mention, it will give you a clearer idea of how much you can actually spend.
Basically, pre-approval is a process where the bank or lender evaluates your financial standing and gives you an approved sum to borrow. Sellers take pre-approved buyers more seriously than those who are not. A pre-approval is like a lender’s seal of your trustworthiness, which elevates you to a preferred buyer. The documentation process will also be speedier since the paperwork is already available.
Getting a pre-approval is free and holds no obligation. It provides you with nothing but favourable results. However, a pre-approval is valid only for three to six months. So, your time to look for your dream home is limited by that.
Things to consider in buying a house
After the nail-biting computations and financial aspect of home-buying, the fun part follows. It is considered as such because you’re now dealing with tangible objects. You’re no longer confined in communications and paperwork.
- Ideal area or neighbourhood
Many home buyers are daunted between choosing their ideal home or their desired area. Should you choose a house near the business district or one that’s farther but more spacious?
Before making an offer, decide what your priorities are. Don’t just consider the present; think long-term as you’ll be living with your choice in the years to come.
- Home needs and wants
To be fully happy with your house, it must match your desires and needs. Think of the family you have or plan to have. How many rooms, restrooms, and floors do you want? Should it have a backyard or garden? Do you want a traditional or modern style?
Determine as many details as you can about your dream house.
A piece of advice: label each detail as a want, need, or non-negotiable. It’s highly unlikely that you’ll find a house that has it all. It’s best to know what features you can live without. Knowing these details will also allow you to ask the right questions.
- Real-estate agent
Find a good and trustworthy agent. Ask for recommendations from family, friends, and workmates. As a professional, the agent will make your experience more enjoyable. They will assist you in negotiations and closing the best deal. Your agent will find prospective homes that match your requirements and schedule viewings.
- Home shopping
When viewing houses, don’t just check the house. Imagine yourself living in the location and whether the environment suits you well. Talk to the neighbours. Check facilities near the prospective house. Nit-pick what you think will annoy you in the future. Ask questions and explore possible scenarios. It’s an acceptable time to be critical.
- Pre-purchase inspection
After finding a suitable house and considering an offer, request a home inspection. Proceed only when the home inspector guarantees the house as safe. Although it is an additional cost, it will inform you of potential problems you may encounter should you buy the property.
The full disclosure that a pre-purchase inspection offers will allow you to make the best decision in finalising your home purchase. It can even give you more advantageous terms and pricing.
Enjoy your home, sweet home
Using this checklist as a guide will be helpful. You can eliminate the trouble and stress that comes with unpreparedness. Enjoy your new home free from apprehensions and doubts. Finally, years from now, you’ll reminisce about your first home-buying experience with delight.